Sunday, May 22, 2011

By using Blue Ocean Strategy innovative start-ups can identify market spaces that have no competition, and in doing so render their traditional industry competition irrelevant.

The basic premise of Blue Ocean Strategy is that every market can be segregated into both a red ocean and a blue ocean.

Red oceans are consensus driven; more specifically a consensus that defines a default customer, the vendors and their expected behaviours and characteristics, and the type of product the market has to offer. You end up with a situation where everyone is doing the same thing with the same stuff, selling it to the same people; the result, commercial carnage with massive competition and paper thin profit margins.

Uncontested Market Space - the New Frontier

Blue Ocean Strategy is about breaking free from the bonds of traditional market thinking and realising new vast blue oceans of untapped resources. The first realisation of understanding Blue Ocean Strategy is like standing inside a large box leaning against the wall and suddenly there are no walls. You realise there is no box. Blue Ocean Strategy focuses entrepreneurs and business leaders in the direction of a new uncontested market space for their industry. They create a market niche where the venture is so uniquely positioned that competition is rendered irrelevant.

How does that work? How can one recognise these new market niches?

The answer: Value Innovation

Identifying market niches requires a thing called "Value Innovation". Value innovation involves seeing the values and desires behind peoples’ spending decisions. When you witness these patterns you can take a decision yourself to restructure your business resources to provide an alternative that is significantly better and which remains consistent with the values you have witnessed.

Let’s look again at Cirque Du Soleil. It seems to be the one that everyone quotes from the book Blue Ocean Strategy and it is an example I myself have referred to before in articles, blogs, and speeches. When Cirque du Soleil began the circus industry was on its tail. It had stagnated itself into virtual oblivion. Not exactly an industry one would imagine entering if profit had anything to do with the equation. Rather than creating yet another big top, or little top, circus, the founders of Cirque du Soleil looked at the overall value system of circus goers and the live entertainment industry more broadly so that they might understand what the people, who went out for the evening of entertainment, were looking for.

What motivates or persuades people to go to the theatre or the cinema, instead of going to the circus?

What they found was that the circus was viewed generally as low-brow, juvenile, even crude level of entertainment. The founders of Cirque Du Soleil found that the concept of the traditional three ring circus distracting, annoying, and off-putting to the majority of the public.

Also, public opinion was swaying away from the use of animals in circus. This was pretty dramatic as animals have always been a centrepiece of the circus experience. Driving this was the sensitivity to the possible abuse of the animals behind scenes.

Take Out the Trash: Remove That Which People Don’t Value

The result is Cirque Du Soleil, an experience that is world renowned for being very different to anything else that is out there; indeed since Cirque du Soleil start nothing has even come close to knocking them off their number one spot. The recipe was simple for the founders. They eliminated the three rings; they presented the entertainment more theatrically, more sophisticated and in the form of a narrative; and they removed the animals from the equation – which probably saved them a bundle as well.

By combining the popular and most valued fundamental elements of what people sought from live entertainment, more specifically from both the theatre and circus perspectives, and removing everything that was seen by the public as a negative of both, the founders of Cirque Du Soleil were able to create an alternative far superior to the original; an alternative that neither other circuses nor the theatre industry can contend with directly.

About Paul J. Lange:

Paul J. Lange is a business mentor and business performance coach who helps small to medium enterprise and entrepreneurs to apply big business, enterprise disciplines and solutions to gain a competitive advantage and increase profits.

Paul is also one of Australia’s most connected management consultants, and leading business strategists, with a passion for helping entrepreneurs and business owners who are committed to achieving outstanding results.

Paul’s support will help you to develop strategic direction, implement it, execute and make more money. He will have you starting to work on your business, instead of in your business, right from day one; and if you have already started down this path, he will help you to complete the transition to business owner from business manager.

1 comment:

I agree completely. I've been into web design in Brisbane for years and one thing I learned from my experience is to stick with people that really contributes to the company. No point in running a business if the staff isn't as dedicated as you are.

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